zCreator (94.94)

I have 100% of my assets in TWGP. Advice wanted.

10

I have 100% of my assets in TWGP and actually bought more on Friday. I was thinking I would be holding for the long term but wanted to know what people think. I bought all my shares around $22.00 so I haven't really lost any money but the huge down slide makes me worried. Should I just sell all my shares or wait it out? What do the fools out there think?

Fairly consistant little bugger, which was probably a plus last week, but not my idea of where to place a large chunk of cash. of course I believe in diversity, so your approach wouldn't suit me there either.

Tower Group is an insurance company should be rather bland. The 1.2% dividend is rather small. It's trading almost even in book value with a reasonable P/E for an insurance company.

Insurance companies are generally nice and stable. Buffet likes them because they are usually consistant and predictable and have good cash flow. I don't like them because they insure against natural disasters. Generally the house is rigged by years of calculations and is in their favor, sometimes Mother Nature has a way of being inconsistant, more so lately than what seems normal. Insurance companies try to balance this and not be fully divested in any one area. Reading Tower Groups higher level data, I'm not feeling the love here.

As part of a balanced portfolio, the 11% operating margin and 17% profit margin look pretty good. As a solo investment......to each his own, but not me.

If you feel this current correction is limited, then there are some bargains out there. There's also opportunity to put in low buy orders and try to hit some volitility swings. If you are scared of the market, there are safer, similar investments.

I like and own TWGP, but I wouldn't put 100% of my money into any one stock not named PG or JNJ. Even then, it's too risky.

Insurance companies can report negative earnings unexpectedly over any quarter due to unexpected natural disaster. I don't think TWGP operates in areas susceptible to massive weather-related damage, but the possibility of a freak accident exists and I wouldn't want my entire portfolio of one holding to be decimated should that freak accident occur.

Even with small amounts of money, I would personally try to split up my portfolio into several pieces. If your entire portfolio is under $2500 or so, however (ie you're just starting out), then it's a different story.

Never, ever have all of your assets in one stock. In fact, never have all your assets in one asset class.

The only way that average retail investors can succeed over the long term is through proper diversification and risk management. Even having all your assets in dollars is incredibly dangerous due to currency risk and opportunity cost.

This is not specific investment advice but please consider picking up a book on portfolio management. I swear that you really will be better off. You can still make individual stock picks and try to outperform the market but without risk management you're leaving yourself very exposed.

I like the stock. If it's something like $5000 that you put into the stock market, it should be OK to keep it all in TWGP. If it's more than that, it's not OK to keep the eggs in one basket, even though this particular basket looks very sturdy. But I expect TWGP to survive any bear market and also don't see much downside from here, barring some major flooding or earthquake.

@BlackshearCaptL: I do agree with you. After looking at a lot of other stocks going down the drain it does scare me quite a bit.

@ragedmaximus: Yeah I was looking at the daily charts myself and it did look like if the $22 range breaks down the next strong support levels are at $20.

@TSIF: I'm not sure if the correction is limited or not (but enough experience to know that the market will go where it wants to go). When you say reading the higher level data and not feeling the love what do you mean by that? Also I do tend to play a defensive game when it comes to stocks (I don't suppose you know any safe growth stocks out there? :-))

@Donnernv: I'm definitely looking for lots of growth (80% growth and 20% capital preservation, assuming 'preservation' means how much the dollar is worth with inflation) and TWGP being a small cap I thought in the long term it could keep growing. Also management has a lot of experience in their field which is a big plus. The balance sheets looked pretty solid and the charts were showing a lot of support in the $21 region. And thank you for the blog and stock suggestions I'll definitely check them out.

@bullishbabo: My portfolio is about $36k. It's not a lot but it's not a small amount either (for me at least). I guess I should try splitting it up into different sectors (and countries). I know the basics of reading charts and financial statements but the thing that eludes me is the overall world economy. :P

@ragedmaximus: Will definitely check it out.

@dwot: Well I do look at my basket a few times a day. :)

@Robuh: That is a good idea, I probably should read a book about portfolio management. Any recommendations?

I wouldnt have everything in one stock unless It was JNJ,KO Or PG. However if you want to sell say half and start 4 more positions in companies whose fundamentals you like that would make sense. Look at my ozzfan1316 portfolio thats my real life holdings if you want some ideas. I am no not value or growth I just buy companies that I think are well run and I would want to a partner in.

zCreator, like a lotter number I use to play week after week when I was young and foolish....I was out of country a few times and left my money for someone else to buy the ticket for me a few times....it never hit, but twice I was told by the person that I left my money with that they forgot to play, so great news, here's my money back......how would they have felt if it hit...how would I have felt....I stopped playing it and I don't look at the results....better things to do with my money and my worries as outlandish as the odds were....my point...not sure if I have one, but you are in a pattern you can look back on and second guess anything you do now very easily. Any adivce you get can be second guessed....move ahead don't look back.

If I had $36,000 to save and my metrics seemed to be what I'm interpretting yours to be.....safety and growth, but I still believed in the market overall, then I'd ahve about 8 equities. I like a little risk, and the chance of more than standard growth balanced against a greater risk of loss, so that would get one or two of my 8.

If I wanted stability in the rest, I'd get at least one precious metal and one oil.

Growth, safety, however, I'd pull up some two year charts. What companies took the least hit from the bottom, (March 9, 2009 of the recessoin). What continued to grow.

Some of the ones I'd look at are McDonalds and Coke.

McDonalds's is growing internationally and buying back stock like crazy.

Then I'd find one or two that have really been showing some good growth throughout the recesson. Dolby and Hasbro come to mind.

There's loss of advice out there. If you subcribe to an of MF's paid services, you might want to look at Stock Advisor. I've been pretty impressed with that board and the stability of some of their picks.

As far as TWGP, I would keep some of it, but the things I didn't like on quick review were:

The risk, that is hidden should be get back to back hurricanes, natural disasters, etc. I'd have to read their FULL annual reports to see how they hedge. Second, I don't like their Accounts Receivable rising so high as well as thier Accounts Payable. Accounts receivable should NOT be this high in this industry from the "LITTLE" that I know. This is sometimes used by companies to hide actual value, but someday part of it may need to be written off. They ar showing good steady growth, but I have to question that when accounts receivable is over 75% of net tangible assets.

Good luck, keep researching. Do what feels "right" and safe within your own metrics. LOTS and LOTS of good value/growth stories out there, many are muddied by the recessoin. Dollar General, and several others have really shown that when people are in financial distress they will keep spending, but they will do so more wisely.

First, bad idea to put eggs in one basket. TWGP isn't event the best in this class (look @ TMK, CINF for two comps). Second, look for solid businesses with a relatively high (over 10%) Free Cash Flow/Price yield. TWGP is a pretty good company by the numbers so don't sweat it.